Cyprus Startup Funding Rounds Taxonomy 2026 — SAFEs, Convertibles, Pre-Seed, Seed, A/B/C, Bridge

1. SAFE (Simple Agreement for Future Equity)

SAFEs were originated by Y Combinator (US, 2013). Cyprus law-compatible implementation:

• Cyprus contract law (Cap. 149) accepts SAFE-equivalent contractual instruments.
• Investor receives FUTURE shares (at next priced round) in exchange for current cash.
• Typical SAFE terms: valuation cap + / or discount.
• Pre-money / post-money SAFE variations + 'most favoured nation' clauses.
• Cyprus-side accounting: deferred income on company balance sheet until conversion.
• Cyprus-side tax: no tax event on SAFE issuance; tax event at SAFE conversion to shares (typically capital event, 0% under titles exemption).

2. Convertible Notes

Convertible notes (convertible loans / convertible bonds) are debt instruments converting to equity at specified triggers:

• Cyprus law: Cap. 113 + contract law support convertible-loan structures.
• Typical terms: interest rate, maturity date, valuation cap, discount, conversion mechanics.
• Interest accrual: standard Cyprus interest accounting + tax treatment.
• Conversion to equity: typically no immediate Cyprus tax event for investor (capital instrument conversion).
• Conversion at qualifying-priced-round triggers; non-conversion triggers (maturity, default) trigger different mechanics.

3. Pre-Seed round

• Typical size: €100k-€500k.
• Common instruments: SAFEs, convertible notes, simple equity (ordinary shares).
• Investors: angels, founder networks, pre-seed funds, accelerators.
• Cyprus implementation: minimal complexity — ordinary share issuance + simple SHA + UBO Register filing.
• Cyprus IP Box: pre-revenue scaling — IP Box methodology development begins.

4. Seed round

• Typical size: €500k-€3M.
• Common instruments: priced equity (Series Seed Preferred), SAFEs, occasionally convertible notes.
• Investors: angels + seed funds + sector-specialised funds.
• Cyprus implementation: preferred-class shares with liquidation preference + anti-dilution + drag/tag + reserved matters.
• Cyprus Bar / ICPAC-led SHA + M&AA drafting + Registrar HE2/HE3 filings.

5. Series A / B / C rounds

• Series A: €3M-€15M. Significant Cyprus SHA work. Multi-class preferred structures. Board reconfiguration.
• Series B: €10M-€50M. Growth-equity participation. Pre-emption + ROFR layered. Founder vesting completed; secondary component common.
• Series C: €30M-€150M. Pre-IPO / pre-large-M&A. Multi-class share consolidation. Increased investor governance + reporting rights.
• Each round: Cyprus M&AA + SHA amendments + Registrar filings + UBO Register updates.

6. Bridge / extension rounds

• Bridge round: between priced rounds; typically SAFE / convertible-note structure.
• Extension round: same security as last priced round (Series A Extension, Series B Extension); additional investor allocations to existing class.
• Cyprus implementation: similar to original priced round but with smaller scope.
• Bridge financing often funded by existing shareholders (insider bridge) — anti-dilution protection considerations.

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Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws change frequently. Consult a qualified Cyprus adviser for guidance specific to your situation. The information on this page is general guidance only and does not constitute legal, tax, accounting, immigration or financial advice. Specific advice should be obtained based on the facts of each case.